A legislative committee tasked with reviewing the government’s draft revisions to the Social Insurance Law has declined to raise the retirement age, Tuoi Tre newspaper reported this week.
The current Labor Law allows the government to adjust the retirement age, Truong Thi Mai, chairwoman of the National Assembly’s Committee for Social Affairs, was quoted as saying during the proceedings.
As such, she pointed out, there's no need to propose raising that age to prevent the social insurance fund from going bankrupt.
The law stipulates that qualified people who hold management positions can retire as many as five years later than the mandated age; those who work under dangerous, toxic or demanding conditions can retire before that age.
At the moment about 300,000-400,000 new pensioners come online every year; at the same time, around one million young people enter the labor market, meaning that the number of laborers is still higher than the number of dependents.
When the two figures are equal, the retirement age must be “definitely” increased, she said.
The committee, however, supported the government’s proposal to begin adding extra allowances in calculating their total social security payments. At the moment, those allowances are exempt.
Mai called the changes “necessary” to beef up social insurance capital.
Under Vietnam’s existing law, social insurance premiums are calculated as 26 percent of one’s monthly salary, of which the employee contributes 8 percent and the employer the rest.
The government proposed raising the age by four months every year, starting with state employees in 2016 and extending to others in 2020, until it hits 62 for men and 60 for women.
Vietnam’s current retirement age is 60 for men and 55 for women.
Around 6.2 percent of Vietnam’s 90-million population is 65 years old and above.
Presenting the government’s proposal to the National Assembly at the meeting, Pham Thi Hai Chuyen, Minister of Labor, War Invalids and Social Affairs said the pension fund is at risk.
The ratio of contributions to spending has rapidly increased from 57.2 percent in 2007 to 76.3 percent in 2010, and was estimated at 76.6 percent last year, she said.
The minister quoted the International Labor Organization as saying the fund will fall short of its obligations in 2021.
That shortfall could be resolved by tapping into previous years’ surplus--but even those would run out by 2034, she said.
Since the Social Insurance Law took effect seven years ago, only 20 percent of Vietnam's labor force has paid into the fund, according to Chuyen.
Many businesses, mostly in the private and foreign sectors, delayed or failed to pay social insurance for their employees creating a total debt of over VND4.7 trillion (US$222.1 million) by the end of 2013, which also affected the fund’s income, she said.
The bill of the revised Social Insurance Law will be discussed at the ongoing National Assembly meeting and is expected to be passed during the next session.
Like us on Facebook and scroll down to share your comment